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February 3, 2006

iPod++

Tonight, Team Rioja (formerly known as "Team Flower Power Sugar Puff") brought in a predicted and undisputed victory at the Morgan Stanley "Portfolio in Peril" competition. The competition is a role-playing simulation exercise where each participating team is charged with creating and managing a multi-asset investment portfolio. The goal is simple: make the most money.

Team members from Team Rioja included Paul Dabrowski, Leon Arber, Chris Grier, and yours truly. In an attempt to intimidate the other players, I was talking a big game to anyone that would listen during the days leading up to the event. "Team R.A.T.S." manned by Ryan, Sameer, and Anthony were ears to most of my trash talking, but I spared some for Ankur and Bill from "Team Three Rupees and a Dollah" and Brandt from "Team Get A Name". I even guaranteed our victory when I met some of the Morgan Stanley representatives in the afternoon. Deb caught ear of my claim to be leading the powerhouse team and convinced some of the Morgan Stanley people that we were the group to beat; the stage was set for an overly deserved shaming in the event of a loss.

Biasing our portfolio early in foreign equities and global energy, we took an early lead, keeping among the top four positions in the 12 team competition during the first rounds. Chris diligently tracked news headlines, carving out a globally diversified real estate investment strategy that trended with the earthquake destruction in South East Asia and damage caused by U.S. hurricane Maggie. Leon supported a strong shift in assets to Asian technology markets which helped to place the team in third place coming into the final round of play. Realizing the need for a risky move if there was to be any hope of capturing first place, I suggested a more focused asset shift - specifically, taking our globally and class diversified portfolio and investing it, in its entirety, into U.S. financials. Cmon, the game was hosted by Morgan Stanley, the largest investment bank in the United States! Leon and Paul predicted nuclear war and a world left in shambles, but I knew that no company was going to hold a simulation where the home team loses. Obviously America was going to come out on top. Chris immediately disagreed with my strategy, Leon semi-politely just ignored my pleas towards full investment into U.S. banks, and Paul just laughed off my foolishness. The entire game I was mostly focused on the strategy the game designers would have used when designing the game and not just the economic situations they posed for us in the simulation. After my nagging began to show signs of fatigue and apathy in my group members, I finally convined them to shift our balance over to U.S. financials. And guess what? That's why we won! And yes, I'm going to take quite a bit of credit for that pull from behind victory and each of us walking away with an iPod (the second I now own, neither of which I paid for). So congratulations to Team Rioja* and good job to me for my game theoretic approach to portfolio management. Interestingly enough, the guy running the event said that our CS Department had a better overall performance than the same competition run in Yale's Business school. Heh, engineers win again.

In other news, I got my two papers submitted to USENIX this past Wednesday and plan on enjoying the rest of my weekend. Come Monday, regained focus to finishing my work and writing up results for the fast approaching PET deadline.

* It should be mentioned that Paul and Leon were mostly responsible for getting us into good positioning leading into the final round, both having better investment backgrounds than Chris or I. Then again, the simulation included a Monkey competitor that chose his portfolio investments completely at random and was beating us and most of the other teams for at least half of the game. The monkey ended up in third place overall.